The central government is drafting a national strategy on intellectual property rights (IPR) to increase the number of patents in China, to match other major global economies, it was revealed yesterday.

Wang Jingchuan, commissioner of the State Intellectual Property Office (SIPO), said the strategy promises to complete IPR legislation in China in the next five to 10 years while strengthening the enforcement of copyright laws.

The SIPO and the Ministry of Science and Technology are currently working on the draft of the strategy and it will be completed soon, Wang said.

He made the remarks yesterday at the 2003 Intellectual Property Strategy and Enterprises' Key Competitiveness Forum, which was organized by the Shanghai municipal government.

The strategy also aims to support the Agreement on Trade Related Aspects of Intellectual Property Rights, signed by China after it joined the World Trade Organization, and to enhance the competitiveness of Chinese businesses.

The strategy takes account of US and Japanese IPR practices. Wang revealed it will require governments at various levels to offer preferential policies to encourage inventors to set up small and medium-sized high-tech enterprises based on their patents. The strategy will also urge domestic firms to apply for patents abroad for promising inventions.

Japan completed its national intellectual property strategy last July and started to implement it in March this year to maintain its industrial competitiveness worldwide.

China's system of patent applications and IPR protection, which has failed to keep pace with the country's booming manufacturing industries, is still in its "early stages,'' Wang admitted.

Only 951 Chinese patent applications had been lodged with the World Intellectual Property Office by the end of last year, compared with 44,609 from the United States, 13,531 from Japan and 2,552 from South Korea.

The latest SIPO statistics also show the Chinese mainland had applied for only 195 patents in the United States, the world's largest market. Japan had lodged 34,856 patent applications and Taiwan Province had 5,431 on the books.

"The situation is not optimistic,'' said Wang.

He warned that China's manufacturing industries could not develop sustainably if they ignored the importance of patents and failed to innovate.

SIPO statistics show Chinese firms spent only one third of their total purchasing budget on local innovations to assimilate imported technologies.

Wang revealed Japanese businesses spent three times as much developing and localizing these technologies.

China's exports are also increasingly suffering from the lack of patented technologies.

Currently, more than 80 per cent of international trade barriers are based on technology patents, said Zheng Chengsi, a noted expert on intellectual property law and a member of the Law Committee of the National People's Congress (NPC).

In 2002, 71 per cent of China's exporters and 39 per cent of the country's exports encountered technological trade barriers to various degrees, with an estimated loss of US$17 billion, Zheng said, citing statistics from the country's trade authorities.

"On the one hand, we need domestic businesses to become more aware of IPR but, on the other hand, we also want them to defend their legal interests,'' Zheng said yesterday.

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